Euro Parity, Here We Come.
from The Market Hosted by Etherfuse
The Euro versus the US dollar is down 8% since September 2024, to a level of 1.02, close to parity. Some predict the Euro could reach parity by the end of January. Drivers of the route to parity: * Political uncertainty in Germany and France. * Threat of US tariffs making exports more expensive. * Severe uncertainty in bonds and the government budget in Europe’s neighbor the UK. * Low interest rates making yields less attractive versus the UK and US. What can reverse this path? * US tariffs being more bark than bite. * Positive election outcomes in Germany and France. * Unchanged interest rates. * An end to the Russia Ukraine conflict. * An upturn in economic data. Key data to watch * Purchasing Managers Indexes (PMIs). * Recent PMIs have been good. If they continue, perhaps some hope. * Next PMI is January 20, 2024, the day of US Presidential inauguration. More PMIs will come out towards the end of January and should be watched. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit etherfuse.substack.com
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